USD/JPY climbs further beyond the 113.00 mark. Another leg higher is looking likely through the end of the year but economists at Westpac are more cautious in their forecast for 2022.
113.00/50 likely to remain an important cap for the pair in the short-term
“Near-term, 113.00/50 is likely to remain an important cap for the market. However, we still see the USD strengthening over coming weeks given the Fed has already begun its taper, is set to debate accelerating it/raising inflation dots at the Dec meeting and US data is coming in well above expectations.”
“We still see 115/116 as likely into mid-Dec though in the very short-term markets are likely to remain skittish as we await results from the key drug companies as they run antibody tests on the new Omicron variant.”
“Beyond end Dec we would be more cautious about a correction in the USD given the size of the move. With both monetary and fiscal policy set to become less supportive and US cases accelerating, further USD upside is less obvious.”
“We shift our one week bias back to neutral, maintain a positive outlook on the month and maintain a neutral outlook on three months.”